AUSSIE 10-YEAR TECHS: (M5) Remains Toward Top End of Recent Range

Standard Chartered: "Our USD equation was on track throughout Q1-2025 but broke down on 2 April, supporting the view that Trump’s reciprocal tariff announcement may have generated a sea change in attitudes towards US assets. We have argued that the promised US fiscal moves would support yields in a USD-positive way, but the market clearly now has doubts. Recent events may tarnish the USD for an extended period. A successful economic rebound and higher risk-adjusted returns would encourage a return of capital from outside the US, in our view. But there would have to be visible signs of economic policy success;
otherwise, non-US holders of USD assets may just want to get out and stay out.

There is a case that the current USD pessimism (as reflected in the sharpness of recent price action) is overstated. The simultaneous unwind of the basis trade and rise in stagflation fears may be adding to upward pressure on yields and encouraging position unwinds across markets. So it is still possible that the recent asset price moves largely represent traditional risk reduction by market participants rather than dumping of USD
assets by international holders.

Looking ahead, we think the restoration of the higher UST yield = stronger USD equation would be a major sign of normalisation and could enable a USD rebound if
the tax bill goes forward as planned. There is a risk that the bond market would rebel if the fiscal bill meant an even more elevated deficit path, but we think the unwinding of growth pessimism, along with reduced prominence for tariff policy, could lead to renewed USD support." 

AUD/USD is tracking modestly higher in early Monday dealings, the pair last near 0.6300/05, after ending last Friday at 0.6289 in NY. The A$ was up around 1% for Friday's session as broad USD weakness continued. Early G10 trends are mixed today though, with EUR, JPY and CHF all weaker, by 0.30-0.50% at this stage. This likely reflects late Friday news around tariff exemptions from the US for the electronics sector.

• For AUD/USD technicals, we are above the 50-day EMA (near 0.6265), while the 100-day EMA is very close by at 0.6320/25 (which marked earlier highs this Monday). 0.6409, the Dec 9 high from last year is seen as key resistance. On the downside, 0.6116/0.5915 Low 10 / Low Apr 9 and the bear trigger, are levels in focus.
• Remarks from US President Trump on social media earlier stated that the country will look at the whole electronic supply chain and that Friday's announcement was not a tariff exception (per Rtrs). Trump added that these products are still subject to the existing 20% fentanyl related tariffs. Still, risk could be supported given the rates are lower than feared, particularly in relation to imports from China (at least for now).
• Broader risk sentiment will be in focus, with US equity market sentiment ending last week up, +1.81% for the SPX. Any further positive risk follow through could see crosses like AUD/JPY regain further ground. This pair was last near 90.75/80, with the 20-day EMA close to 91.85/90 on the upside. Friday lows in this pair just under 88.30. AUD/CHF is back to 0.5160/65, but ran into earlier resistance around 0.5200.
• The local data calendar is empty today, with RBA minutes from the last policy meeting out tomorrow. 

J.P. Morgan: "We stay bearish USD, especially vs EUR & JPY, as the tariff-induced vol shock continues to filter through markets. The 90-day postponement of reciprocal tariffs offers a degree of relief......but 10% baseline tariffs and the ratchet on China to 145% mean cyclical and trade drags will linger. These continue to erode US exceptionalism. We still see a meaningful chance of a US recession, and US inflation looks poised to weigh on US real yields to the dollar’s detriment......against an overhang of foreign ownership of assets that may drag on USD via global asset reallocation or hedging.

This backdrop is constructive for low-yielders, and some cyclical mid-yielders, particularly if risk sentiment stabilizes...
...but is still a tenuous backdrop for EM FX generally. Remain UW EM FX as recent G10 & EM FX performance vs USD have diverged.
The shift in CNY fix above 7.20 opens upside in the pair; we revise USD/CNY targets to 7.60 (7.40).
FX Forecasts: USD/JPY 2Q 142 (151), 1y 139 (147). EUR/USD 1y 1.16 (unchanged) with upside risk. EUR/CHF 2Q 0.92 (0.97), 4Q 0.91 (0.98). EUR/GBP 2Q 0.87 (0.85), 4Q 0.89 (0.87). USD/CAD 2Q 1.41 (1.45), 1y 1.38.
EM: USD/CNY 2Q 7.45 (7.30), 4Q 7.60 (7.40). EUR/PLN 4Q 4.30 (4.15). EUR/HUF 4Q 420 (400). USD/ZAR 4Q 20.50 (18.75). USD/MXN 4Q 20.00. USD/BRL 4Q 6.00

Another week, another walk-back on major trade policy. That avoids a worst-case of sorts, but damage has nevertheless been done and US / global recessions are still plausible. Through this, we retain our bearish-USD bias. The major news this week was the postponement of reciprocal tariffs, but keeping the 10% baseline tariff intact (ex-CA/MX) and raising tariffs on China materially higher. Just a week ago, following Liberation Day, JPM made a US recession our base-case alongside a 60% probability that a global recession would follow suit."